Reuters journalist looking for input on Bitcoin

[naomioleary]

Ah, yes, also -

It seems to me that two things have to happen for Bitcoin to become more widely used.

1. A programme needs to be available to allow people to buy and safely hold Bitcoins that is easy to use and not time consuming.

2. Bitcoin would need to be priced and tradeable on a major exchange that people trust to provide neutral pricing data and protect their transactions.

One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?

Naomi

[Meni Rosenfeld]

I'm currently looking to meet up with people who use Bitcoin in or near London, so I can see for myself how it works. I'm especially keen on meeting anyone who actually has a mining operation - I've been hearing about dry ice and various kinds of modifications, it all sounds fascinating, I'd love to see one for real.

You should consider contacting Amir Taaki (aka genjix) who lives in London and, among other things, is a core Bitcoin developer and operates an exchange; and Vladimir Marchenko, who lives in Sheffield and last I heard, owned a large contract-mining farm.

1. A programme needs to be available to allow people to buy and safely hold Bitcoins that is easy to use and not time consuming.

2. Bitcoin would need to be priced and tradeable on a major exchange that people trust to provide neutral pricing data and protect their transactions.

There's a lot to be desired in these two areas but I think the current options are good enough, I don't think that's what is holding Bitcoin back.

One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?

The biggest problem is AML (anti money laundering) laws which attempt to put a handle on activities that could be an opening for money laundering. At best, the licensing and reporting required to comply with such laws has costs involved and hassles customers. I don't know what specific problems Tradehill have been having.

[mcorlett]

ps. mcorlett - I'm actually not British, I'm from the Republic of Ireland, but that's not important.

I apologize profusely. The mistake has been corrected in the original post.

[wareen]

One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?

Without going into specific regulations (which of course depend very much on the jurisdiction in question); probably the biggest problem is legal uncertainty.

Bitcoin just doesn't fit nicely into many of the relevant regulatory frameworks. Even the question whether Bitcoin is a currency or a commodity is still open!
Bitcoin is most certainly sui generis and there has yet to be a definitive ruling on its legal status. Before we have that, running Bitcoin businesses is unfortunately a risky venture.

Although it is common for technology to out-pace the legal system, with Bitcoin possibly disrupting the highly regulated and monopolized monetary systems around the world, this issue is not to be taken lightly.

[acoindr]

Ah, yes, also -

It seems to me that two things have to happen for Bitcoin to become more widely used.

1. A programme needs to be available to allow people to buy and safely hold Bitcoins that is easy to use and not time consuming.

2. Bitcoin would need to be priced and tradeable on a major exchange that people trust to provide neutral pricing data and protect their transactions.

One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?

Naomi

The answers you've gotten so far I believe are spot on.

But let me add a perspective concerning wider use. Money is a funny thing. What gives it value is agreement. For example, pretty seashells and feathers have been used as money because enough people agreed to accept them.

If you were going to buy a car and the dealer offered a 50% discount if you paid in bitcoins, I think you'd quickly become interested in acquiring bitcoins too. The items listed will come about naturally. For example, I had sent you a PM about Safeb.it which solves number 1, and Mt.Gox.com, the largest current exchange, essentially answers number 2 already.

Bitcoin has a bit of a chicken and egg problem, but one which will likely work itself out because of its favorable features over current "money".

Bitcoin is growing at a phenomenal rate with no signs of slowing down. Nothing of it existed prior to Jan. 3, 2009, and now a search for "bitcoin" returns 12 million results on Google. Even you noted the global response you've gotten.

Regulations are perhaps a speed bump slowing some parts of development towards much wider spread use, but they certainly won't prevent it.

[Phinnaeus Gage]

Even the question whether Bitcoin is a currency or a commodity is still open!

Or as a payment system as David Birch outlines in this new video on YouTube: http://www.youtube.com/watch?v=1jgbk9BIVlQ

Bear in mind, there's a myriad of uses for Bitcoin that have yet to be thought of. Some have been thought of, but not quite yet implemented, e.g., as a voting mechanism, where every vote counts via micro-payments. That can't be accomplished with any other currency or payment system online.

Imagine, if you will, able to vote for contestants on The X Factor (UK version) without incurring a phone surcharge, where every .01 EUR (or 0.00273639 BTC) donated equates to one vote, and every bitcoin collected goes to a pre-decided charity, with the possibility of changing it weekly. Each contestant could attach themselves to a charity or, versa visa, charities can attach themselves to a contestant. It'll be a win-win for all parties involved. If a viewer chooses to, they can even see for themselves the exact vote tally on the blockchain, thereby knowing full well that no monkey business has taken place.

Would you, Naomi, voted with bitcoins for the Dublin twins John and Edward on The X Factor if the charity attached to them was Medecins Sans Frontieres?

Note the following: http://en.wikipedia.org/wiki/The_X_Factor_(UK)

The first series was available to viewers only through the Northern Ireland-based ITV station UTV which is widely available in the Republic, but subsequent series have also been shown on the Irish terrestrial TV station TV3.

Series 1–4 of the UK version of The X Factor effectively included Irish viewers on an equal footing, and Irish viewers were able to vote in these series via SMS or telephone. However, for series 5 in 2008, voting from Republic of Ireland was discontinued, with the decision being blamed on new regulations introduced regarding phone competitions in the UK. In 2010 TV3 announced that Irish viewers would only be able to vote using voting numbers posted online once the live shows start. These numbers change weekly.

Important note: Many fine journalists have made the mistake of incorrectly using the following words or terms: Bitcoin; Bitcoins; bitcoin; bitcoins; BitCoin; Bit Coin; Bit Coins; bit coin; bit coins; etc. We dearly hope you use the correct spelling(s) throughout your forthcoming article, for each term has a different connotation.

~Bruno~

[Meni Rosenfeld]

Important note: Many fine journalists have made the mistake of incorrectly using the following words or terms: Bitcoin; Bitcoins; bitcoin; bitcoins; BitCoin; Bit Coin; Bit Coins; bit coin; bit coins; etc. We dearly hope you use the correct spelling(s) throughout your forthcoming article, for each term has a different connotation.

In particular:
1. "Bitcoin" - capitalized and singular - is the name of a protocol, the concept of using that protocol for a decentralized digital currency, a project to bring about this currency, a software to handle this currency, and an open source project to develop this software.
2. A "bitcoin" is a denominational unit of currency in Bitcoin. So you can have one bitcoin or 3 bitcoins. When used at the start of a sentence, and only then, it is capitalized.
3. There is no such thing as BitCoin, Bit Coin, Bit Coins, bit coin or bit coins.

[zer0]

One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?

Naomi

Look up what happened to the people who ran e-gold and 'Liberty Dollar' (Bernard von NotHaus), and all the Liberty Reserve and other exchangers rounded up in the US circa 2005-2007.

The US has always been poisonous to innovation in digital/alternate currencies which is why until now most exchangers and centralized authorities were based in Malaysia, Costa Rica, Panama, Russia/CIS and Canada

[Phinnaeus Gage]

Important note: Many fine journalists have made the mistake of incorrectly using the following words or terms: Bitcoin; Bitcoins; bitcoin; bitcoins; BitCoin; Bit Coin; Bit Coins; bit coin; bit coins; etc. We dearly hope you use the correct spelling(s) throughout your forthcoming article, for each term has a different connotation.

In particular:
1. "Bitcoin" - capitalized and singular - is the name of a protocol, the concept of using that protocol for a decentralized digital currency, a project to bring about this currency, a software to handle this currency, and an open source project to develop this software.
2. A "bitcoin" is a denominational unit of currency in Bitcoin. So you can have one bitcoin or 3 bitcoins. When used at the start of a sentence, and only then, it is capitalized.
3. There is no such thing as BitCoin, Bit Coin, Bit Coins, bit coin or bit coins.

Thank you for providing this post, Meni.

[acoindr]

One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?

Naomi

Look up what happened to the people who ran e-gold and 'Liberty Dollar' (Bernard von NotHaus), and all the Liberty Reserve and other exchangers rounded up in the US circa 2005-2007.

The US has always been poisonous to innovation in digital/alternate currencies which is why until now most were based in Malaysia, Russia/CIS and Canada

The key difference with Bitcoin, of course, is that no government can shut it down because there is no central authority to target.

[zer0]

One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?

Naomi

Look up what happened to the people who ran e-gold and 'Liberty Dollar' (Bernard von NotHaus), and all the Liberty Reserve and other exchangers rounded up in the US circa 2005-2007.

The US has always been poisonous to innovation in digital/alternate currencies which is why until now most were based in Malaysia, Russia/CIS and Canada

The key difference with Bitcoin, of course, is that no government can shut it down because there is no central authority to target.

Which is the true awesomeness of bitcoin, imho and total game changer in the DGC world

[BkkCoins]

It seems to me that two things have to happen for Bitcoin to become more widely used.

1. A programme needs to be available to allow people to buy and safely hold Bitcoins that is easy to use and not time consuming.

2. Bitcoin would need to be priced and tradeable on a major exchange that people trust to provide neutral pricing data and protect their transactions.

One guy I spoke to set up an exchange, but had to close it down because US financial services regulations made it impossible for him to develop it into a legitimate business. Is regulation the major obstacle for Bitcoin becoming more widely used? Does anyone have any idea what specific regulations are the problem?

Naomi

Have a look at blockchain.info or StrongCoin.com - they run browser based wallet websites that use encryption in the browser to protect your keys (and bitcoins). They can't steal your coins (as was a problem with early web based wallets). You can save a backup of the keys so that even if the sites get shutdown/vanish you still have full access to your bitcoins. These are very easy for beginners to use.

Also there are light-weight clients like Electrum that don't download the whole blockchain.

Regarding exchanges - there are quite a few out there now around the world. At current trading volumes it would seem only MtGox has a worthwhile business and the others are treading water waiting for more volume. Government regulation is the biggest hurdle for these businesses and after that the established financial system seems to be waking up and becoming aggressive against Bitcoin.

IMO Bitcoin needs to viewed as a commodity like gold and dealers need to be as common as jewelers worldwide. There are some small beginnings in this respect. There is websites for OTC (over the counter) trades and for locating local traders to deal with. You should be able to trade some as easily as walking into a 7-11. The more Bitcoin stays out of the way of the "dominant financial system (Wall St banks)" and grows it's own physical network the better chance it has to be strong and resilient.

In the US it's the "Bank Secrecy Act" that appears to be relevant to regulating money exchange and making life harder for Bitcoin exchanges. Other countries have equivalents that have been put in place under US pressure and international treaties.

Again IMO the most appealing aspect of Bitcoin is the potential of giving back control of money to the people. It's the ultimate democratization of money. You can be absolutely sure that those holding the reigns now aren't just going to roll over and let that happen.

[Phinnaeus Gage]

Inspired by Positively Fifth Street: Murderers, Cheetahs, and Binion's World Series of Poker by James McManus, you, Naomi, may consider entering the Satoshi Superstars competition for a chance to win 100 BTC. I don't want to be speaking for edd, creator of the Satoshi Superstars, but I have a feeling that if you opt to enter he, as well as this community, would probably love to see you as a contestant. Who knows, perhaps during the course of the event you'll be dished more fodder for the main Bitcoin article you're penning, with takeaways for some future literary work. At the very least, consider it.

~Bruno~

[Stephen Gornick]

As a bookend to this thread:
 - http://www.reuters.com/article/2012/04/01/traders-bitcoin-idUSL6E8ET5K620120401 (Naomi's report)
 - http://bitcointalk.org/index.php?topic=75015.0